Expert Advice: Long-term Diversification is Key Principle for Financial Investment

To increase the likelihood of investment success, it is better to invest in diversified assets for over 10 years rather than chasing short-term gains. Kim Gyeong-rok, an advisor at Optus Asset Management, and Kang Chang-hui, head of the Happy 100-Year Asset Management Research Institute, advised in a Yonhap News interview that novice investors must strictly adhere to the principles of long-term diversification to mitigate risk.

Advisor Kim explained that products with high leverage, such as REITs with high debt ratios, can result in significant losses due to interest rate fluctuations. He advised against investing in products that are not fully understood even after an explanation.

Representative Kang emphasized that before subscribing to financial products, investors should verify the asset manager’s long-term track record, investment philosophy, fee structure, and provisos. Citing the Hong Kong H-Index Equity Linked Securities (ELS) incident, he explained that losses occurred because investors failed to fully understand the provisos regarding principal protection conditions.

Advisor Kim advised young investors to make long-term investments in assets like the U.S. S&P 500 while increasing their income through their primary careers.